9A Controls & Limitations

When you take that paragraph and couple it with the deliberate (and cost-saving) omission of an "internal controls" report by the outside Auditor you have a situation which looks like an admission that internal controls are lacking.

Add this to the sentence "Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected." and to the clause "...controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate" you have to wonder how a tiny company can issue such a thinly veiled warning when two of its three board members are expert financial people and other is a lawyer.

If THIS doesn't warrant an SEC investigation, what does?